What the end of sex discrimination means for you

Following a landmark ruling from the European Court of Justice, insurers will no longer be allowed to factor in gender when working out premiums. But the implications go far beyond car insurance...

A lot of attention has been paid to the impact the EU ruling will have on car insurance premiums for women.

These are usually much lower than premiums for men, as statistical evidence shows that women are safer drivers. However, when the ruling comes into effect in December 2012 insurers will no longer be allowed to assess risk based on a person's sex. As a result, premiums for women are expected to rise substantially, while premiums for men will fall.

However, men might not want to crack open the champagne just yet. The ruling applies to all insurance products and so will have some negative implications for them too.

Read on to find out how the ruling changes things for both sexes...

Annuities

On reaching retirement, most people choose to buy an annuity with their pension fund, guaranteeing them an income for life.

The annual income they can buy with their retirement pot depends on how long they are statistically likely to live, meaning age, gender and health are all factored in.

Women tend to live longer than men and so will usually be offered lower annuity rates than a man would with the same sized pension fund.

However, the new ruling changes this and could see men paying more. The Association of British Insurers (ABI) estimates men approaching retirement will see an 8% reduction in annuity rates, while women could benefit by a rise of 6%.

It's not necessarily all good news for women, though. Joint annuities, which at present are more likely to be purchased by men, are also likely to become more expensive. That means that women who rely on their husband's pension pots will also suffer a lower income in retirement.

George Ladds, head of pensions at Fair Investment Company, warned that the industry will have to change how it prices annuities.

"Either rates for men and women will be brought in line to create 'unisex' annuity rate, which, will probably see men's rates go down more than women's go up - or annuity providers will have to start looking at each case individually, which is more expensive, and that cost will be passed onto the consumer.

"Either way, the consumer loses out on both choice and value. Annuity rates are already low, and this could be the excuse providers need to pull them even lower."

Life insurance

Statistically, men are more likely to die early, meaning that at present they pay higher premiums for life insurance than women.

From December 2012, this will have to change. The ABI estimates that women could see their premiums rise by as much as a fifth, while men are likely to save around 10% on the cost of their cover.

Maggie Craig, the ABI's acting director general, urged women not to be put off buying cover that they need.

"Not all customers will be equally affected as the use of gender can vary significantly between products and different companies. Each company will have to respond to the ban in the way they feel is in their customers' interests."

Health insurance

While women currently pay less for life insurance, they do tend to pay more for health insurances, such as payment protection policies and critical illness cover. That's because they are statistically more likely to fall ill and claim.

That means that men are likely to see prices for this kind of protection rise after December 2012, as insurers can no longer factor in such statistics.

Car insurance

Both the British Insurance Brokers' Association and the AA estimates that this will see women paying around 25% more for their cover, while younger female drivers will be hit with even higher hikes.

Insurance group RSA described the ruling as "flying in the face of common sense", arguing: "It is completely disadvantageous to the very people it was intended to protect and prevents insurers from using a legitimate rating factor."

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